Consumer Foodservice in Russia

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Executive Summary

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Challenging times for consumer foodservice in Russia

The economic downturn continued to affect the performance of consumer foodservice in 2016. However, despite the negative trends in the overall economic situation, consumer foodservice saw positive current value sales growth. 100% home delivery/takeaway and fast food remained the fastest-growing types. The decrease in real income levels and low purchasing power of Russians hastened a shift from expensive operators to more affordable alternatives. In addition, players continued to adapt to the challenging operating environment through new concepts, a focus on local products, diverse menus and expansion into regions with lower levels of competition and franchising models.

New amendments to consumer foodservice legislation

The new amendments to the Federal Law on the use of cash register equipment came into a force on 15 July 2016. The law covers rules for using cash register equipment as well as cooperation between taxpayers and the tax authorities. According to the new rules, operators could choose to use new models of online cash registers, which transfer data directly to the Federal Tax Service of Russia online. All cash registers should be certified and included on the register on the webpage of the Federal Tax Service of Russia. However, since 1 July 2017, all entities and individual entrepreneurs have been obliged to use the new models of cash registers, which might create additional challenges.

The leading players gain value shares

The competition in consumer foodservice remained extremely strong, with a large number of operators, although there were few strong new entrants in 2015-2016. In such an intense competitive environment, the largest players were more resistant to the challenges to the industry and they strengthened their positions. Moskva-McDonald’s, the leading player, operates two chains: McDonald’s burger fast food and McCafé specialist coffee shops.

Independent operators lose ground to chained operators

In 2016, independent operators continued to dominate consumer foodservice in Russia. However, they saw a drop in value sales and number of outlets at the end of the review period. This was linked to the strong performances of major chains like McDonald’s, Dodo Pizza, KFC and others. The democratisation trend in consumer foodservice and shifts to cheaper foodservice types provided new growth areas for the largest chains. Besides, many independent operators withdrew from Russia as they were old-fashioned and unable to respond to the economic situation and market changes.

Consumer foodservice is expected to recover in the forecast period

In constant 2016 terms, consumer foodservice is expected to recover lost value sales during the forecast period. However, development depends on many factors, especially the economic situation in the country. Real GDP is predicted to grow over the forecast period. 100% home delivery/takeaway and fast food are projected to post the highest value sales CAGRs due to their lower prices and high consumer demand for convenience and quick food options. In addition, consumer foodservice is set to see numerous new and unusual concepts while established operators focus on the quality of food and services they offer.

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